Information Flag question Use the following information for the next 5 questions: Yoda Inc. is evaluating...

  

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Information Flag question Use the following information for the next 5 questions: Yoda Inc. is evaluating a proposal to replace its old CP300 machine with a new R2D200 machine. The firm had just spent $5,000 on a comparison study before deciding on this particular model. The old CP300 has 5 more years of useful life and at the end of its life will have no salvage value. If Yoda Inc. buys the new R2D200, the old CP300 will be sold for $10,000. The new R2D200 will cost $90,000 plus installation costs of $10,000 and will require an initial increase in working capital of $5,000, which will be recovered at the end of the project. The new R2D200 machine will be operated for 5 years after which it can be sold for $9,000. No taxes are expected to be paid on the disposal of the equipment. Both the new R2D200 and the old CP300 are Class 8 assets (CCA tax rate of 20%). The old C3P300 costs $90,000 (before taxes) per year to operate while the new R2D200 will only cost $50,000 (before taxes) per year to operate. Yoda's tax rate is 40% and its WACC is 10%. Question 37 Not yet answered Marked out of 2.00 Flag question Question 38 Not yet answered Marked out of 3.00 Flag question a. What is the Initial Investment Cash Flow (CFO)? $ b. What is the PV of the Annual Incremental Cash Flow? $ Question 39 Not yet answered Marked out of 3.00 Flag question Question 40 Not yet answered Marked out of 2.00 Flag question c. What is the PV of the Incremental CCA Tax Shield? $ d. What is the PV of the incremental Terminal Cash flows: $ 11°C Cloudy ENG 12:25 PM 2021-11-12 Question 41 Not yet answered Marked out of 1.00 Flag question Question 42 Not yet answered Marked out of 1.00 P Flag question e. What is the NPV of the project? $ Based on the NPV calculated above, should the project be accepted? Select one: O a. Yes, it's a GO O b. No, it's a NO GO. 11°C Cloudy ENG 12:26 PM 2021-11-12 Information Flag question Use the following information for the next 5 questions: Yoda Inc. is evaluating a proposal to replace its old CP300 machine with a new R2D200 machine. The firm had just spent $5,000 on a comparison study before deciding on this particular model. The old CP300 has 5 more years of useful life and at the end of its life will have no salvage value. If Yoda Inc. buys the new R2D200, the old CP300 will be sold for $10,000. The new R2D200 will cost $90,000 plus installation costs of $10,000 and will require an initial increase in working capital of $5,000, which will be recovered at the end of the project. The new R2D200 machine will be operated for 5 years after which it can be sold for $9,000. No taxes are expected to be paid on the disposal of the equipment. Both the new R2D200 and the old CP300 are Class 8 assets (CCA tax rate of 20%). The old C3P300 costs $90,000 (before taxes) per year to operate while the new R2D200 will only cost $50,000 (before taxes) per year to operate. Yoda's tax rate is 40% and its WACC is 10%. Question 37 Not yet answered Marked out of 2.00 Flag question Question 38 Not yet answered Marked out of 3.00 Flag question a. What is the Initial Investment Cash Flow (CFO)? $ b. What is the PV of the Annual Incremental Cash Flow? $ Question 39 Not yet answered Marked out of 3.00 Flag question Question 40 Not yet answered Marked out of 2.00 Flag question c. What is the PV of the Incremental CCA Tax Shield? $ d. What is the PV of the incremental Terminal Cash flows: $ 11°C Cloudy ENG 12:25 PM 2021-11-12 Question 41 Not yet answered Marked out of 1.00 Flag question Question 42 Not yet answered Marked out of 1.00 P Flag question e. What is the NPV of the project? $ Based on the NPV calculated above, should the project be accepted? Select one: O a. Yes, it's a GO O b. No, it's a NO GO. 11°C Cloudy ENG 12:26 PM 2021-11-12

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e Since the NPV o... View the full answer